AVIOR CAPITAL MARKETS HOLDINGS LIMITED (previously Jamispan Proprietary Limited) Incorporated in the Republic of South Africa Registration number: 2015/086358/06 Share Code: AVR ISIN: ZAE000211637 ( Avior Holdings or the Group ) ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 30 APRIL 2017 HIGHLIGHTS HEADLINE EARNINGS PER SHARE ( HEPS ) DOWN 16% SUCCESSFUL LISTING ON THE JSE ALT X ON 6 JUNE 2017 RANKED THIRD IN THE FINANCIAL MAIL S RANKING THE ANALYST SURVEY 2017 The board of directors ( the Board ) of Avior Holdings, is pleased to present the abridged audited results of the Group for the year ended 30 April 2017 ( the year ). 1. INTRODUCTION Avior Holdings is the holding company of a capital markets group that provides research, stockbroking, corporate finance, derivatives trading, fixed income trading and transition management service offerings to institutional clients in South Africa and abroad. The Group has offices in Johannesburg, Cape Town and London. Avior Holdings listed on the JSE Limited s ( JSE ) s Alternative Exchange ( ALT X ) on 6 June 2017. Avior Capital Markets Proprietary Limited ( Avior ), a wholly-owned subsidiary of Avior Holdings is rated one of the top 10 research companies in the Financial Mail equity research ratings and has achieved an overall unweighted ranking of number 3 in their recent rankings. The Group s research team consists of 27 analysts, of which 18 have been independently rated by the Financial Mail Top Analyst Awards for 2017. The 18 analysts were rated across 19 equity research sectors and achieved a number 1 in 6 of those sectors. 2. EVENTS AFTER THE REPORTING PERIOD At the end of the reporting period, conditions existed that Avior Capital Markets Holdings Limited will list on the JSE s Alt X after year end and this is therefore an adjusting event as per IAS10. This set of financial statements are therefore drafted based on the IAS 10 principle that Avior Holdings has already listed on the JSE Alt X at year end. 3. RESULTS COMMENTARY Revenue is derived primarily from brokerage and fee income from stockbroking, research, derivatives and fixed income, corporate finance and transition management services. For the year ended 30 April 2017, Group revenue decreased by 2% year-on-year to R179m. Revenue from the Group s cash equities and research division, which accounted for 70% of total Group revenue, declined 1% year-on-year owing in part to pricing pressure. The derivatives division recorded a 26% year-on-year decline in revenue. The division accounted for 11% of total revenue. The UK division grew revenue by 23% year-on-year during the period. The Africa division recorded a 6% year-on-year increase in revenue. While still a small component of total revenue, income from Corporate Finance registered a 160% year-on-year increase in revenue to R2.5m. Gross profit margins improved from 75.2% to 76.9% as JSE and data service costs fell. As a result, gross profit was flat during the period.
Operating expenses increased 5% year-on-year owing in part to a higher staff complement as the Group enhanced its research and administration teams. Due to the strength of the ZAR against the GBP, a R1.8m foreign exchange loss was recognised. Foreign exchange losses on the translation of the UK balance sheet amounting to R5.5m is included in other comprehensive income. 4. PROSPECTS The Group intends to enhance its existing service offerings, primarily through expanding its current research coverage, partnering with the new exchanges, offer stockbroking and research services in respect of issuers listed on such exchanges, expanding its corporate finance offering, and offering exchange traded fund products to its institutional client base. Prospects for the 2018 financial year are subject to numerous factors which remain uncertain, such as value traded on local and global markets. Pricing pressure remains a risk as investors continue to cut costs. Avior is well positioned to benefit from the introduction of MiFID II in Europe as asset managers remunerate high quality research providers. We are focused on continued improvement in our operational performance and leveraging our brand and strong operating platform. 5. REGULATORY CAPITAL SHORTFALL The JSE s Market Regulation Division commenced a formal investigation into Avior s breach of its capital adequacy requirements ( Shortfall Event ). This has been ongoing since October 2016. Avior has provided its full support and has co-operated fully with the JSE throughout this process. Additional details regarding the Shortfall Event can be found in paragraph 13.6 of the Avior Holdings Pre-Listing Statement dated 30 May 2017. 6. CHANGES TO THE BOARD During the financial period under review, the following changes occurred to the Board: 6.1. Marilyn Ramplin was appointed as an independent non-executive director and chairperson of the Board with effect from Monday, 24 April 2017. 6.2. Mark Collier was appointed as an independent non-executive director and chairperson of the Audit and Risk Committee with effect from Monday, 24 April 2017. Mr. Collier subsequently resigned with effect from Friday, 21 July 2017. The Board has commenced with the process to appoint a new independent non-executive director and shareholders will be advised once an appointment has been made. 6.3. Elias Masilela was appointed as an independent non-executive director, with effect from Monday, 24 April 2017.
7. CHANGES TO THE DESIGNATED ADVISOR AND COMPANY SECRETARY Ateeqah Khan was appointed as the Company Secretary on 5 April 2017. 8. DISTRIBUTION OF ANNUAL FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING 8.1. Distribution of the annual financial statements for the year ended 30 April 2017: A copy of the annual financial statements contained in this announcement, incorporating a notice of annual general meeting will be distributed by Avior Holdings to its shareholders on or about 23 August 2017. Shareholders should note that, as a result of Avior Holdings listing on the JSE s ALT X subsequent to its financial year-end, Avior Holdings will not prepare and distribute an integrated annual report for the year ended 30 April 2017. Accordingly, Avior Holdings first integrated annual report complying with the Listings Requirements of the JSE and the King IV Report on Corporate Governance ( King IV ) will be prepared and distributed for the financial year ending 30 April 2018. 8.2. The Board endorses the principles contained in the King Report on Corporate Governance ( King III ) and confirms its commitment to those principles where, in the view of the Board, they apply to the Group. A copy of the King III compliance checklist is contained in the Pre-listing Statement made available on the Group s website www.avior.co.za. 8.3. Broad Based Black Economic Empowerment ( BBBEE ) Annual Compliance report Avior is a level 5 contributor to BBBEE. The BBBEE Annual Compliance Certificate is available for download on the Group website: www.avior.co.za. 8.4. Notice of annual general meeting: 8.4.1. Notice: Notice is hereby given that the annual general meeting of the shareholders of the Group will be held in the boardroom of Avior Holdings at its registered offices located on the 1 st Floor, 82 on Maude, situated at 82 Maude Street, Sandton, Johannesburg, 2196 on Wednesday, 13 September 2017 at 10h00, to transact the formal business as set out in the notice of annual general meeting. 8.4.2. Record date: The date on which shareholders must be recorded as such in Avior Holdings share register in order to be eligible to attend and vote at the annual general meeting is Friday, 8 September 2017, with the last day to trade being, Tuesday, 5 September 2017. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF AVIOR HOLDINGS MARILYN RAMPLIN Chairperson 28 July 2017 AUDITOR PKF (vga) Chartered Accountants Incorporated Audit partner: HC Nieuwoudt DESIGNATED ADVISOR Pallidus Capital Proprietary Limited TRANSFER SECRETARIES Terbium Financial Services Proprietary Limited REGISTERED OFFICE 82 on Maude 82 Maude Street Sandton WEBSITE: www.avior.co.za
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME % Audited Audited Figures in Rands change 30 April 2017 30 April 2016 Revenue -2% 178 505 436 181 775 953 Cost of sales -8% (41 200 138) (45 006 820) Gross profit 0% 137 305 298 136 769 133 Other income 2424% 2 622 779 103 928 Operating expenses 5% (121 810 853) (116 226 650) Operating profit -12% 18 117 224 20 646 411 Investment revenue 20% 3 220 530 2 679 110 Fair value adjustments -99% 11 031 1 770 478 Finance costs 114% (855 168) (398 951) Profit before taxation -17% 20 493 617 24 697 048 Taxation -17% 6 300 330 7 599 872 Profit for the year after taxation -17% 26 793 947 32 296 920 Other comprehensive income: Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations -960% (5 561 126) 646 753 Other comprehensive income for the year net of taxation -960% (5 561 126) 646 753 Total comprehensive income for the year -36% 21 232 821 32 943 673 Earnings per share (cents) -34% 12.50 18.98 Diluted earnings per share (cents) -34% 12.50 18.98 Headline earnings per share (cents) -16% 15.70 18.61 Diluted headline earnings per share (cents) -16% 15.70 18.61 Earnings attributable to ordinary shareholders 21 232 821 32 943 673 Loss or profit on disposal of property, plant and equipment (net of tax) (131 714) 597 Exchange differences on translating foreign operations 5 561 126 (646 753) Headline earnings attributable to ordinary shareholders 26 662 233 32 297 517 Number of shares in issue -18% 141 457 900 172 162 800 Weighted average number of shares in issue -2% 169 838 094 173 532 000 Diluted weighted average number of shares in issue -2% 169 838 094 173 532 000
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION % Audited Audited Figures in Rands Change 30 April 2017 30 April 2016 Assets Non-Current Assets Property, plant and equipment 3% 3 614 650 3 509 268 Intangible assets 419 454 - Deferred tax 52% 16 874 345 11 069 818 Loan receivable 0% 750 000 750 000 41% 21 658 449 15 329 086 Current Assets Loans to directors, managers and employees -32% 2 424 767 3 546 059 Margin and collateral accounts 16% 8 574 583 7 366 215 Trade and other receivables 92% 5 653 858 2 937 517 Financial assets -52% 3 064 864 6 447 459 Operating lease asset -100% - 193 008 Current tax receivable 311% 1 102 971 268 146 Amounts receivable in respect of stock broking activities -89% 46 970 215 426 472 502 Cash and cash equivalents 6% 63 435 808 59 904 723-74% 131 227 066 507 135 629 Total Assets -71% 152 885 515 522 464 715 Equity and Liabilities Equity Share capital -18% 14 146 17 216 Reserves 244% (5 561 126) (1 616 448) Retained income -6% 79 617 120 84 289 805 74 070 140 82 690 573 Liabilities Non-Current Liabilities Loans from related parties 13 000 251 - Current Liabilities Trade and other payables 11% 17 860 309 16 055 688 Financial liabilities held for trading -40% 2 668 353 4 452 879 Operating lease liability 377 374 - Current tax payable -97% 4 299 131 791 Provisions 39% 3 323 061 2 383 928 Amounts payable in respect of stock broking activities -90% 41 581 728 416 749 856-85% 65 815 124 439 774 142 Total Liabilities -82% 78 815 375 439 774 142 Total Equity and Liabilities -71% 152 885 515 522 464 715 Total number of shares in issue -18% 141 457 900 172 162 800 Net asset value per share 9% 52.36 48.03
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS Figures in Rands % change Audited Audited 30 April 2017 30 April 2016 Cash flows from operating activities Cash receipts from customers 8% 172 075 632 159 136 413 Cash paid to suppliers and employees 48% (151 070 623) (101 877 386) Cash generated from operations -63% 21 005 009 57 259 027 Interest income 4% 2 779 406 2 679 110 Dividend income 34 149 - Finance costs 90% (757 985) (398 951) Tax paid 10% (2 635 065) (2 395 562) Net cash from operating activities -64% 20 425 514 57 143 624 Cash flows from investing activities Purchase of property, plant and equipment -29% (1 813 348) (2 541 030) Purchase of other intangible assets (338 775) - Net cash from investing activities -15% (2 152 123) (2 541 030) Cash flows from financing activities Buy back of shares (29 025 554) - Movement in loans from related parties 13 000 251 - Dividends paid - 100% - (9 581 324) Net cash from financing activities 67% (16 025 303) (9 581 324) Total cash movement for the year -95% 2 248 088 45 021 270 Cash at the beginning of the year 302% 59 904 723 14 883 453 Effect of exchange rate movement on cash balances 1 282 997 - Total cash at end of the year 6% 63 435 808 59 904 723
SUMMARISED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Figures in Rands Share capital Share premium Total share capital Foreign currency translation reserve Treasury shares reserve Total reserves Retained income Total equity Balance at 01 May 2015 17 346 3 509 358 3 526 704 80 708 (1 493 831) (1 413 123) 58 483 527 60 597 108 Profit for the year - - - - - - 32 296 920 32 296 920 Other comprehensive income - - - 566 045-566 045-566 045 Total comprehensive income for the year - - - 566 045-566 045 32 296 920 32 862 965 Distribution of share premium - (3 509 358) (3 509 358) - - - - (3 509 358) Purchase of own / treasury shares (130) - (130) - (769 370) (769 370) - (769 500) Dividends - - - - - - (6 490 642) (6 490 642) Total contributions by and distributions to owners of group recognised directly in equity (130) (3 509 358) (3 509 488) - (769 370) (769 370) (6 490 642) (10 769 500) Balance at 01 May 2016 17 216-17 216 646 753 (2 263 201) (1 616 448) 84 289 805 82 690 573 Profit for the year - - - - - - 26 793 947 26 793 947 Other comprehensive income - - - (6 207 879) - (6 207 879) - (6 207 879) Total comprehensive income for the year - - - (6 207 879) - (6 207 879) 26 793 947 20 586 068 Purchase of own / treasury shares (3 070) - (3 070) - (345 120) (345 120) (28 858 311) (29 206 501) Transfer between reserves - - - - 2 608 321 2 608 321 (2 608 321) - Total contributions by and distributions to owners of group recognised directly in equity (3 070) - (3 070) - 2 263 201 2 263 201 (31 466 632) (29 206 501) Balance at 30 April 2017 14 146-14 146 (5 561 126) - (5 561 126) 79 617 120 74 070 140
SUMMARISED AUDITED CONSOLIDATED SEGMENTAL INFORMATION Figures in Rands 2017 SA Region UK Region Total Segment revenue 154 194 987 28 870 762 183 065 749 Revenue from external customers 149 636 745 32 375 351 182 012 096 Intersegment revenues eliminated - (3 529 304) (3 529 304) Interest revenue 3 220 531 22 644 3 243 175 Other income 1 337 711 2 071 1 339 782 Segment expenses (146 684 300) (14 076 280) (160 760 580) Cash expenses (147 483 367) (14 030 644) (161 514 011) Interest expense (877 812) - (877 812) Intersegment expenses eliminated 3 529 304-3 529 304 Depreciation and amortisation (1 852 425) (45 636) (1 898 061) Income tax expense (317 392) 6 617 724 6 300 332 Segment profit 7 193 294 21 412 206 28 605 500 Non-cash items (not included in segments results) Foreign exchange gains/(losses) (3 105 580) 1 282 997 (1 822 583) Fair value adjustments 11 031-11 031 Segment assets and liabilities Segment assets 117 395 581 49 723 308 167 118 889 Segment liabilities 91 003 762 526 112 91 529 874 Investments Investments in subsidiaries 1 750 427-1 750 427 Capital expenditure Computer equipment 867 073 126 236 993 309 Leasehold improvements 265 417-265 417 Furniture and Fixtures 220 954-220 954 Office Equipment 112 852-112 852 Computer software 402 055-402 055 Motor vehicles 760 800-760 800 Intangible asset - Cobi Interactive Software 524 317-524 317
Reconciliation between segment information - 2017 Revenue and other income 184 359 776 Total segment revenue 183 065 748 Foreign exchange gains 1 282 997 Fair value adjustments (non cash) 11 031 Revenue as per statement of profit and loss 184 359 776 Expenses (163 866 159) Total segment expenses (160 760 579) Foreign exchange gains/(losses) (non cash) (3 105 580) Expenses as per statement of profit and loss (163 866 159) Assets 152 885 514 Total segment assets 167 118 988 Loans to group companies eliminated (12 483 047) Investments in subsidiaries (1 750 427) Total assets as per statement of financial position 152 885 514 Liabilities 78 815 375 Total segment liabilities 91 529 874 Loans from group companies (12 483 047) Accruals (231 452) Total liabilities as per the statement of financial position 78 815 375
2 016 SA Region UK Region Total Segment revenue 158 138 929 26 382 134 184 521 063 Revenue from external customers 155 393 819 29 788 190 185 182 009 Intersegment revenues eliminated - (3 406 056) (3 406 056) Interest revenue 2 679 110-2 679 110 Other income 66 000-66 000 Segment expenses (144 449 988) (15 372 527) (159 822 515) Cash expenses (144 892 944) (15 343 823) (160 236 767) Interest expense (398 951) - (398 951) Intersegment expenses eliminated 3 406 056-3 406 056 Depreciation and amortisation (2 564 149) (28 704) (2 592 853) Income tax expense (3 342 482) 10 942 354 7 599 872 Segment profit 10 346 459 21 951 961 32 298 420 Non-cash items (not included in segments results) Foreign exchange gains/(losses) 20 436 (1 809 077) (1 788 641) Profit/(loss) on sale of tangible assets (37) (792) (829) Fair value adjustments 1 770 478-1 770 478 Administration and management fees 17 492-17 492 Segment assets and liabilities Segment assets 495 960 387 29 804 574 525 764 961 Segment liabilities 440 909 922 645 590 441 555 512 Investments Investments in subsidiaries 1 750 327-1 750 327 Capital expenditure Computer equipment 742 891 448 875 1 191 766 Leasehold improvements 99 033-99 033 Furniture and fixtures 137 427-137 427 Office equipment 734 811-734 811 Computer software 377 982-377 982
Reconciliation between segment information - 2016 Revenue and other income 186 329 469 Total segment revenue 184 521 063 Foreign exchange gains 20 436 Fair value adjustments (non cash) 1 770 478 Administration and management fees 17 492 Revenue as per statement of profit and loss 186 329 469 Expenses (161 632 421) Total segment expenses (159 822 515) Foreign exchange loss (1 809 077) Profit/(loss) on sale of tangible assets (non cash) (829) Expenses as per statement of profit and loss (161 632 421) Assets 522 464 715 Total segment assets 525 764 961 Loans to group companies eliminated (1 549 919) Investments in subsidiaries (1 750 327) Total assets as per statement of financial position 522 464 715 Liabilities 439 774 142 Total segment liabilities 441 555 512 Loans from group companies (1 549 919) Accruals (231 451) Total liabilities as per the statement of financial position 439 774 142
Notes Basis of preparation The summarised consolidated annual financial statements have been prepared in accordance with the JSE Listings Requirements and the requirements of the Companies Act, 71 of 2008 (as amended) ( the Act ) applicable to summarised financial statements. The JSE Listings Requirements prescribes that summarised consolidated annual financial statements be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the consolidated annual financial statements were derived in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements. The consolidated annual financial statements have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value, and incorporate the principal accounting policies. They are presented in South African Rand. The consolidated financial statements were compiled by Nerious Nhara (Northplan Chartered Accountants) under the supervision of Naeem Tilly (Financial Director) and were approved by the Board on 27 July 2017. Independent audit The summarised consolidated financial statements are extracted from audited information, but are not itself audited. The consolidated annual financial statements were audited by PKF (VGA) Chartered Accountants., who expressed an unmodified opinion thereon. The audited consolidated annual financial statements and the auditor s report thereon are available for inspection at the Group s registered office. The directors take full responsibility for the preparation of the summarised consolidated financial statements and the financial information has been correctly extracted from the underlying annual financial statements. Dividend Management believes that cash should be retained to fund future investment and growth within the Group. The Board has therefore resolved not to declare a dividend for this reporting period. P. Koutromanos N. Tilly (Chief Executive Officer) (Financial director)